Unsecured Loans vs. Secured Loans

When in the market for a loan, you'll need to diligently analyze all of your available options. You'll discover that there are two key loan types (unsecured and secured) with each catering to varying borrowing situations. It is important that you understand the difference between unsecured and secured loans so that you can utilize the best loan for your needs.

Unsecured Loans
When you utilize an unsecured loan for your financing needs, lenders deem that you will able to repay your loan based on your current financial recourses. Loan approval is not contingent on 'collateral'. This means that you are not granting the lenders the rights to any specific asset that you own, i.e. home or car, as security in the event that you are not able to repay your loan obligation.

Interest rates associated with unsecured loans are typically high than secured loans. In addition, unsecured loans also have lower borrowing amounts. Click to learn more about the interest rates associated with personal loans.

Secured LoansSecured loans are typically utilized when financing larger purchases. A secured loan is reliant upon the borrower providing 'collateral' as security for repayment. For instance, home equity loans are a very common type of secured loan. In order to achieve approval for your home equity loan, you are going to be required to provide the lender rights to your home as collateral (your mortgage is written against the loan). Similar to an auto loan with the vehicle being the collateral. If you default on your home equity loan, the lender will take possession of your home. If you default on your auto loan, you will lose your car.

As the name of the loan suggests, secured loans offer 'security' that you are going to repay your loan based on the agreed upon conditions and terms. As indicated above, it is important to note that the property you put up as collateral will be repossessed in the event you are unable to make payments and default.

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, the lender will ask for your name, address, date of birth, and other information that will allow the lender to identify you. The lender may also ask to see your driver's license and other identifying documents.

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Rate quotes provided to customers will be no greater than 35.99% APR (APRs include 0-5% origination fees), with terms from 12 to 72 months and available borrowing amounts of $1,000 to $35,000. Representative Personal Loan Example: For a $5,000 36-month loan at an interest rate of 6.03% with a 1.11% origination fee of $55.50, you will receive a loan amount of $4,944.50 and will make 36 monthly payments of about $152.18 at a 6.78% APR. Total loan cost would be $5,478.48.